After a promising start, the stock markets declined and the benchmark Sensex dropped a good 352 points at close on fears of an imminent hike in fuel prices.The 30-share Sensex on the Bombay Stock Exchange ended the day lower by 352.39 points, or 2.15 per cent, at 16,063.18 points.

The National Stock Exchange index Nifty also shed 130.50 points, or 2.68 per cent, to close at 4,739.60.

The markets opened strong with a gain of over 217 points and even hit the intra-day high of a high of 16,632.72 points but aggressive selling emerged following weak trends in European markets owing to fears of fallouts of high crude prices.

Marketmen said investors seem more concerned about the anticipated hike in fuel prices as it will have further adverse impact on inflation, which crossed the highest level in more than three-and-a-half years.

Meanwhile, a decision on raising retail fuel prices was delayed further with a consensus on price hike eluding the government even as losses of state-run oil companies widened to Rs 650 crore a day in the light of sky-high global crude prices.

European markets were trading substantially lower in their early trade while Asian indices closed with moderate to smart gains today.

Analysts attributed the initial surge by 217 points to better-than-estimated GDP growth of 9 per cent in 2007-08.